TRENTON - The Department of Banking and Insurance today issued
a bulletin alerting the health care industry
of a contingency plan for the October 16 federal deadline to file all medical
claims electronically.

The bulletin is the most recent step in the Department's ongoing
effort to ensure prompt payment of claims to hospitals and physicians, who face
deadlines to comply with the Health Insurance Portability and Accountability
Act (HIPAA).

The act set an October 16, 2003 deadline by which all Medicare and Medicaid
claims must be filed electronically, and all other claims that are filed electronically
must be in compliance with HIPAA uniformity standards.

HIPAA, which was enacted in 1996 to ensure uniformity and reduce
costs in claims handling, promises to save the health care system in New Jersey
$780 million, according to a study by Thomas Edison State College.

"New Jersey will continue to stand up for our doctors,
hospitals and other providers to make sure they get paid in a timely manner,''
Insurance Division Director Don Bryan said.

The Centers for Medicare and Medicaid Services (CMS) in Washington,
D.C., recently announced that it was implementing a contingency plan to accept
non-compliant electronic transactions after the October 16 deadline.

The practical effect of this announcement is that Medicare
claims will continue to be paid, notwithstanding some deviation from the HIPAA
transaction and code set (TCS) standards. This is consistent with another bulletin
issued on August 19 by the Department, which emphasized the need to adhere
to New Jersey laws governing the prompt payment of medical and dental claims.

"Considerable time and resources have been spent in this
effort and the projected savings for all parties will be significant and fully
justifies this effort. The contingency plan will come to an end, at which time
the use of HIPAA-compliant claims will then become mandatory. While the length
of this grace period is not yet known, it is clear that it will not last very
long," according to the bulletin.

Commissioner Holly C. Bakke, who has made HIPAA a top priority,
has urged all parties to continue to strive for full compliance. The announcements
do not constitute an extension of the October 16 deadline, but establish a contingency
plan which will permit the continuation of the payment of medical claims while
payers and providers move forward with their plans for the full deployment and
implementation of the HIPAA TCS standards.

All providers, payers and their trading partners are reminded
that they must have an established plan for the use of HIPAA compliance standards;
test the standards and be prepared to demonstrate all compliance training, testing
and out-reach efforts with trading partners; and recognize that full complete
and total compliance with the HIPAA TCS standards will be required in the near
future.

Commissioner Bakke previously stressed that, in bringing claims
in compliance with HIPAA, insurance companies and other payers are not exempt
from New Jersey's prompt pay laws, which require that electronically submitted
clean claims be paid within 30 days of receipt and paper claims be paid within
40 days.

Despite continued efforts by the Department, the federal government,
the New Jersey Hospital Association and the New Jersey Medical Society to remind
doctors, dentists and other providers of the deadline, recent studies and test
pilots showed an alarmingly high number of claims would be rejected and unpaid
if the deadline were today because the claims were not HIPAA-compliant, according
to William O'Byrne, manager of the Department's enforcement unit.

New Jersey has emerged as a leader in the efforts to become
HIPAA-complaint, and the consensus
guides on the Department's Web site have helped direct insurance departments
throughout the country, noted O'Byrne, who has been asked to serve on several
nationwide panels and committees on the subject.

O'Byrne attributed the success of the consensus guides to the
fact that they were developed by a wide range of professionals - from all aspects
of the industry - who comprised an implementation task force formed by the Department.

OPRA is
a state law that was enacted to give the public greater access to government
records maintained by public agencies in New Jersey.

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